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Understanding Poverty in India

Publication | January 2011
Understanding Poverty in India

This book develops a poverty profile for India in view of the ongoing national and global efforts toward ensuring inclusive growth and bringing poverty levels down.

The incidence of poverty in India is a matter of key concern for policy analysts and academic researchers both because of its scope and intensity. National poverty line estimates indicated a poverty incidence of 27.5% in 2004-2005, implying that over one quarter of the population in India lives below the poverty line. Also, in absolute numbers, India still has 301.7 million poor persons with a significant percentage of them being substantially or severely poor in terms of the norms identified as being necessary for survival.

If one considers the international poverty line of $1 per day (measured at 1993 purchasing power parity exchange rates), then the percentage of poor people in India is even higher, at around 34%. This percentage is pushed up to an alarming level of 80% if one uses the $2 per day as a poverty threshold.

The significance of India in the context of world poverty is apparent given the fact that around half of the world's poor live in South Asia and of the 534 million people in South Asia who lived on less than $1 per day in 2003, over 300 million lived in India. The Suresh Tendulkar Committee estimated over 430 million (37.2%) below the poverty line based on a bundle of deprivations. The recently introduced multi dimensional deprivation index (MPI) also places about 645 million (55.4%) Indians below the poverty line. In terms of non-income dimensions of poverty too, such as infant and maternal mortality rates, literacy levels and gender inequalities, India continues to display 'intense poverty'.

While economic growth is a powerful tool for poverty reduction, the impact of higher growth on poverty reduction depends significantly on the pattern of growth and levels of inequality. Owing to rapid growth in recent years, the Indian economy has also undergone significant structural changes. Inclusive growth has therefore become a major policy priority and is defined as a process whereby the benefits of growth are shared by a vast proportion of the population.


Inclusive growth needs to be achieved to reduce poverty and other disparities and raise economic growth. Over the recent past, three critical strategies and policy interventions for poverty reduction have emerged, which are aimed at enhancing availability and access to the following three types of infrastructure:

  • physical infrastructure (roads, electricity, irrigation);
  • economic infrastructure (financial services); and
  • social infrastructure (education and health).

This book develops a poverty profile for India in view of the ongoing national and global efforts toward ensuring inclusive growth and bringing poverty levels down. This poverty profile will enable academics and policy makers to reassess and improve on the existing methodologies in estimating poverty rates, evaluate the effectiveness of existing poverty programs, and suggest alternative and complementary options for strategic intervention based on the lessons drawn from program implementation both at the state and national levels.


  • Preface
  • Poverty in India: Conceptualization and Methodological Issues
    • The Challenge of Poverty: An Overview
    • Conceptualizing Poverty
    • Estimation of Poverty
    • Poverty Profile of India
    • Growth, Inequality and Poverty Eradication
    • Labor Market and Poverty
    • Government Initiatives for Poverty Eradication
  • Strategies for Poverty Reduction: Focus on Infrastructure, Financial Inclusion and Social Sector Interventions
    • Social Sector Services and Poverty Reduction in India
    • Beyond Micro-credit: Financial Inclusion and Micro-enterprise Development for Poverty Reduction
    • Infrastructure Development and Poverty Reduction